For our family open house singalongs, we use a very broad definition: "anything two or three people like to sing and can remember the tune to". Since I sometimes overcomplicate things, my ex has added "and that you can sing in the kitchen while making dinner". We don't make a distinction between "folk" and "world" music -- our song book has songs in at least 8 languages -- but that's a personal choice.

In other words, besides traditional (usually anonymous) folk music, anything goes for us so long as it has entered the general cultural consciousness, at least that of the "folkie" community (definiton of folkie: people like us). That includes commercial &/or contemporary thorough-composed folk music (e.g. Dylan, Ewan MacColl, Stan Rogers, Tarika), old Beatles favourites, Sesame Street counting songs, other children's songs, pop songs of the swing era, you name it: but only if you can sing it a capella or with just a guitar or two, without studio equipment/click track/conductor/session musicians/six rehearsals etc., and if it meets the "you can sing it in the kitchen while making dinner" criterion.

So some of (e.g.) Stan Rogers' songs make the cut, but others fall by the wayside because they are too technically tricky for most of us to remember the tune right or fit the words in. "Mr. Tambourine Man" gets a special dispensation even though it's tricky: getting the words & the tune together in the l-o-n-g last verse often reduces us to giggles, but we like it too much to not include it.

The great thing is, since we are all "folk", you too can have your very own definition of folk music. Leave the arguments to the purists and lexicographers, and just keep on singing!